Thats not just the assessment of yours truly, but the frank admission of the California Public Employees Retirement Systems chief actuary. A number of cities across the country have already gone bankrupt. Its becoming a recurrent news item, more common than children falling into wells.
What to do?
Not much can be done about the cushy benefits already written and approved in previous union contracts. But preventing utter calamity may be possible; a few obvious steps can be taken. Stop double dipping and extravagant unearned benefits. Switch new employees from fiscally ruinous defined-benefit pensions to a 401(k) system, the same retirement program most private sector employees have.
Simple? Yes. But also über-difficult. Public employee unions function as the largest source of funding and activism for the Democratic Party. In blue states, theres fat chance that Democrat-controlled legislatures will cut the fat from their favored benefactors. In red states, Republican politicians are nonetheless wary of the awesome political power unions wield, and likely to watch to see how more courageous politicians like Wisconsin Governor Scott Walker end up.
But in 24 states, citizens neednt wait in the wings, consigned to the role of spectators: They have access to the ballot initiative process and can petition their fellow citizens to place these necessary reforms on the ballot to be enacted directly by voters.
Thats what people in San Diego are doing, led by City Councilman Carl DeMaio, now a candidate for mayor. DeMaio is spearheading an initiative that earlier this month qualified for the June 2012 ballot against a barrage of union dirty tricks.
Public employee unions hired blockers to harass those circulating and wishing to sign petitions and even launched a massive advertising campaign, previously detailed in this column, attempting to scare San Diego voters away from signing petitions by claiming using their First Amendment rights put them at risk for identity theft. Longstanding anti-identity theft organizations lambasted the disingenuous union-financed radio ads, which somehow neglected to mention that in the history of Californias initiative process, with hundreds of millions of petition signatures gathered, there has never been an actual case of identity theft.
The unions dont want to end their joy ride on the gravy train of excess bennies, regardless of the burdens placed on the citys taxpayers. Now theyll have to spend big bucks fighting DeMaios measure, which they know makes sense to voters.
In a city with a $2.7 billion total annual budget and a $2.1 billion deficit in its pension fund, the Comprehensive Pension Reform ballot initiative — dubbed CPR — would stop the hemorrhaging of the citys financial future by ending the defined-benefit pensions for newly hired city workers. Instead, the city would start matching what funds new employees place into individual 401(k) accounts, the same retirement system most San Diego private sector workers have.
The measure also attempts to halt pension spiking, a practice whereby city employees can have their lifelong pensions calculated in relation to various specialty pays, bonuses, and other forms of compensation, which can cause retirement pay to be far higher than if based on their normal pay.
The CPR measure would also require current employees to pay more toward the cost of their pensions going forward, as a fair reading of state law already requires, and would provide taxpayers greater information about the payouts being made to city workers.
The point isnt to punish public employees, its to stop punishing taxpayers. It also forestalls financial Armageddon by preventing extravagant pension benefits from eating up so much of the budget that city governments chief purpose becomes to reward public employees.
As Carl DeMaio puts it, City employee compensation should be no better, and no worse, than what is available to other employees in San Diego."
It seems like common sense. A rare commodity in todays politics, and one usually brought to the fore by citizens through initiative petitions.